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HomeIMF: Influential and Manipulative Financing?
Posted by Larry Doyle on March 31st, 2009 8:19 AM |
Could American banking regulators and the Federal Reserve itself work under the purview of the International Monetary Fund? With the G-20 getting ready to meet later this week in London, increased global financial regulation is a major topic on the agenda. French Prime Minister Sarkozy is leading the charge. The WSJ reports An Empowered IMF Faces Pivotal Test:
The IMF is about to gain more power. Thursday’s summit of leaders of the Group of 20 industrialized and developing nations is poised to elevate the IMF by promising to pump more than $250 billion into the fund, and asking it to issue “early warnings” about countries in peril.
“Everyone sees the need for a rejuvenated IMF,” says Egyptian Finance Minister Youssef Boutros-Ghali, who heads a policy-making group that oversees the IMF.
The IMF’s track record around the globe is decidedly mixed. In certain countries, such as Ukraine and Belarus, economic conditions worsened despite IMF aid. (more…)
The Global Economic Horizon
Posted by Larry Doyle on March 14th, 2009 2:45 PM |
While there is nothing like a nice 10% rally in equity markets to salve a wounded soul, let’s not get overly ebullient. The global economy is facing a host of issues the likes of which it has not seen in a long time, if ever.
I truly relish the honest perspectives offered by a number of our Thought Leaders. A recent piece posted by Professor Ken Rogoff, a former chief economist for the International Monetary Fund, and currently a professor of Economics and Public Policy at Harvard, lays out a logical road map for global interest rates, economic growth, sovereign defaults, and inflation. Let me preface Rogoff’s piece by stating the road will be long and steep!
What does Rogoff think about the prospects here in the United States under the Obama administration? He writes, “US long-term growth could be particularly dismal, as the Obama administration steers the country toward more European levels of welfare assistance and income redistribution.”
I strongly recommend Rogoff’s What is the Deficit Endgame? Please access a wealth of other global perspectives at the Thought Leaders link (in the left sidebar), which provides access to leading global economists and over 400 periodicals from around the world.
LD
A Question of Honor
Posted by Larry Doyle on March 13th, 2009 1:00 PM |
On January 31st, I wrote a lighthearted piece, Know Your Customer, about my personal experience with an Asian counterparty. The lesson I learned from that experience back in the late 1980’s was that business dealings in Asia are ultimately “a question of honor.” Are you honorable in your manner? Are you honorable in your engagement? Are you honorable on a going forward basis? Are you honorable in both word and deed? Obviously in a meaningful relationship, this code of honor must run both ways.
Our relationship with the People’s Republic of China hinges on American consumers’ purchase of Chinese exports and ongoing Chinese purchase of U.S. government debt. As I just highlighted in my most recent piece, Chinese exports fell 26% in February 2009. Numbers like that will make any government uneasy. During challenging economic periods, the tenuous nature of any economic relationship is captured in understanding the nuances of the Prisoner’s Dilemma. (more…)
Keating Undresses Geithner
Posted by Larry Doyle on March 9th, 2009 12:37 PM |
One of the few countries in the world to escape the worst of this economic tsunami is Australia. I introduced you to former Australian Prime Minister and Treasurer Paul Keating on February 18th in my piece entitled A Fresh and Honest Perspective. Keating was brutally honest in the video clip (thank you SR for providing it!!) included in that article .
I love an honest man!!
Former Australian Prime Minister and Treasurer Paul Keating
Well, Mr. Keating has spoken again and I am listening to him very closely as I strongly believe I am more educated and informed as a result. Our domestic officials and media outlets should take heed.
In an article published in this past Saturday’s Sydney Morning Herald, Obama’s Economic Saviour Savaged as Keating Let’s Rip. Keating offers a piercing review of then Treasury Officer Geithner’s structuring of an IMF led rescue plan of the Southeast Asian crisis in 1997-98. For those unaware, many countries in SE Asia had massive infusions of foreign capital in the form of debt to facilitate infrastructure development. Geithner and then IMF Chief Michael Camdessus structured a plan that injected $200 billion dollars in the form of IMF loans to refloat the economy. Keating maintains that Geithner and Camdessus totally misdiagnosed the problem and in turn the solution. (more…)
The Weakest Link
Posted by Larry Doyle on February 27th, 2009 10:45 AM |
It is widely believed that the weakest link in the global economy centers on Eastern Europe. In light of that, the leaders of 12 eastern European countries are holding an emergency economic summit this weekend. From that summit, it is expected that these countries will request an international bailout.
As of now it appears the countries in greatest degree of stress are Hungary, Ukraine, and Serbia. The expectation is that the group of countries will request the European Union to arrange a $230 billion bailout package. Who would provide the funding? A conglomerate of European Central Banks, the International Monetary Fund, the World Bank, European Investment Bank, and European Bank for Reconstruction and Development.
A major issue for eastern Europe is that their creditors, largely western European banks along with western European countries, are not exactly in great shape themselves. These countries may look to accelerate their entry into the EU and the full adoption of the Euro along with it.
As the pressure and stress builds, the chance of political dislocation also grows.
For further details on how Hungary Seeks $230 Billion Bailout for Eastern Europe. I will be monitoring this situation as it develops. As our global economy is very much interconnected, the increase in sovereign credit risks is a very serious concern.
LD
